I am a registered investment advisor based in Houston Texas, specializing in equity options. My focus is naked put selling and spread trading. I have past experience in commercial banking, real estate, and oil and gas, as well as various types of other derivative investments. My world was turned upside down by the financial crisis of 2008-9. Many of my views are slanted to expose and correct the corruptions existing in the world’s financial markets. I have a BS in economics from UC Berkeley and an MBA in finance from the U of Pennsylvania Wharton School. Reach me at rbf10@comcast.net

Voicing Both Sides Of The Patent Troll Debate

With all of these questions floating around in my head, I wanted to ask someone working in the trenches. I found an opportunity to discuss patents and the trolling debate with Mr. Doug Croxall, CEO of Marathon Patent Group (MARA).

Mr. Croxall owns over 55 patents with Marathon Patent Group composing three portfolios that are currently generating revenue. In other words, these patents have a proven history, as defendants have already acknowledged their validity by paying royalties or settling for a lump sum payment. Indeed, 35 separate defendants have settled with just one of the company’s patent portfolios.

This makes Mr. Croxall’s perspective perfect for one side of the trolling debate. With 33 currently active lawsuits against 42 defendants, Marathon Patent Group certainly does not shy away from the courtroom. Indeed, Mr. Croxall leads a company with a significant revenues deriving from the precise type of contentious monetization practices that are the focus of America’s debate.

Richard: Doug, briefly, the non-practicing entity platform has been under a relentless attack from corporate America as well as now some politicians have joined the fray. From your perspective where do things stand?

Mr. Croxall: The 2011 Act was sort of an industry blow. That brought in first to file versus first to invent as the new standard. That gives deep pockets a huge advantage, because they have resources to make numerous numerous filings on the way to an ultimate invention. A small inventor doesn’t have that luxury. They also took away “joinder” which increased the number of lawsuits we have to file, thus clogging the courts more than ever. [Joinder restrictions increase the number of lawsuits by limiting plaintiffs' ability to join defendants within single cases.]

Richard: Why do you think so many want to put NPEs out of business?

Mr. Croxall: Big corporations want to pay as little as possible for intellectual property, and fewer NPEs means fewer payments. Understand, a patent is a property right granted by the U.S. government. Many in our industry give voice to smaller inventors who have neither the time, the money, nor more critically the expertise to defend their property rights. An inventor many times doesn’t have the knowledge to commercialize certain creations. A patent is property, as is owning a house. Can anybody just come along and steal your home?

Also, what is the line between a practicing entity and a non-practicing entity? The new studies show NPEs are a tiny minority of new lawsuits. How do we know that when one corporation litigates against another that the IP wasn’t purchased from a third party? The corporations have a powerful lobby and are upset they no longer have the playing field to themselves.

Richard: That makes sense. Is there any truth to alleged abuses by NPEs?

Mr. Croxall: No industry is perfect, and bad actors exist. There are some cases of “secondary parties” getting sued that some consider stretching the envelope.

Richard: Can you clarify who a “secondary party” might be?

Mr. Croxall: Sure. It often happens in the retail industry. Say, if a retailer or end user purchases a point of sale checkout system from a vendor, and it turns out that seller of those electronics/software are accused of patent infringement, then the retail business owner may get sued also.

Richard: Even though the retailer had no clue about any of it, they may be liable?

Mr. Croxall: Probably not, but I’m not sure if one of those cases has been fully litigated. The new reform bill currently in the House, H.R. 2639 I believe, expressly exempts secondary parties from liabilities of torts of the primary party.

Look, at my business, Marathon, it’s about the inventor with quality patents. We see so many deals, we only pick the very best with primary, obvious infringement. Probably only 5 percent of patents examined by our engineers make it to the bottom of our funnel. It cost a lot of money to do the due diligence… have lawyers examine the patent, do the in-depth prior art searches, not to mention carefully study the product that is allegedly infringing. It’s all very time consuming, so any of our cases that we don’t resolve amicably and does reach lawsuit status you can be certain that win or lose, enough homework has been done, and there is some merit to our infringement claim.

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